Luxist Report: What is the future of private jet travel?
For the past six months, the private jet industry has been hit from all sides. Not only has the recession caused both businesses and high net-worth individuals to travel less, but the government has gotten involved.
Ever since the automakers who flew to Washington D.C. were grilled about how they got there, the private jet has become synonymous with excess and greed. And now everyone from CEOs to celebrities to Britain's royal familyare flying commercial. As Josh Smith over at our sister blog, WalletPop, put it, "private air travel is as uncool as taking your mom to prom."
This airborne austerity is nothing but bad news to the private jet industry, which already saw usage plummet last summer after the spike in fuel costs. The industry includes not just the companies that make the planes, but also the maintenance and repair industries, the FBOs (fixed base operators) at the airport that offer services, and of course the charter companies. In response to the slowdown, Cessna has cut back production, Gulfstream has laid off workers and the entire industry has been forced to dramatically scale back.
I recently spoke with Ryan Dos Ramos, VP of Business Development at Pacific Coast Jet, to see how private jet companies are dealing with these changes and what the future holds for this beleaguered industry.
Pacific Coast Jet is based out of Hayward, Calif., and offers charter, management, sales, and acquisition services. As you might imagine, Dos Ramos is concerned over the bad reputation that private jets have gotten recently. He says that the private jet industry accounts for 1.2 million jobs and points out that private jets are "a lifeline for tens of thousands of companies" because they provide not only faster connections but also remote access to locations that aren't serviced by commercial airlines. For these people, time is money and they often don't have the patience to travel commercially, wasting countless hours in airports. Currently, however, image is nearly as important as utility, and private jet users are hyper-aware of how they are perceived by the public. No wonder then that many companies, not just those under government scrutiny, have decided to trim their fleets.
For those in the market for a plane, there has probably never been a better time to buy. Dos Ramos mentions that some have even forecast that by the time the market bottoms, one in five of the world's active business jet fleets will be up for sale. While it's a great time for buyers, there's one major fly in the ointment: financing. The world's banking crisis, which has decimated the real estate market also, means that financing terms for expensive planes are not nearly as generous as they used to be. If you've got the cash in hand though, you can get yourself a great deal.
At Pacific Coast Jet, one strategy they have been using to keep their customers flying private is introducing them to the world of smaller planes. Dos Ramos says that they has been showing people that "smaller, more efficient airplanes like the Cessna Citation Mustangs" can reduce the cost of private travel. He reports that while those who are accustomed to flying in Gulfsteams are still flying in them for the most part, others who were flying in mid-size jets are finding the small Cessnas a more affordable alternative. Smaller planes from Cessna, Embraer, and others have another big benefit: they use less fuel. This could be a huge advantage in the future when fuel prices rise again.
Dos Ramos asserts that the private jet charter industry has a bright future despite the downturn in the economy, and that traveling on a private jet is one of the greatest luxuries and tools to both business and leisure travelers. Words I saw recently mirrored by National Business Aviation Association CEO Ed Bolen, who told Investor's Business Daily that corporate jets are and will continue to be the workhorses of the business world.
After our initial chat, I had to ask Dos Ramos one final question that has been on my mind for some time. In 2005 I started hearing about air taxi services like DayJet promising a fleet of very light aircraft that would zip around the United States on quick and affordable short flights. DayJet came out of the box early, ordering more than 300 of Eclipse Aviation's Eclipse 500, the hot new very light jet that everyone was talking about. Flash forward to now, DayJet has folded and Eclipse has filed for Chapter 11. Will the market ever be ready for an air taxi service?
"I don't see the potential for air taxi services like DayJet, at least in the foreseeable future, says Dos Ramos. "Also, you must quantify what an air taxi is. Some view it as shared seating on an airplane with normal routes, to others it is just normal charter. I think there is tremendous charter potential for very light jet aircraft, but I don't think it will ever be as affordable as an airline ticket. Flying on any private jet will remain expensive, no matter what some of these air taxis are claiming. That being said, very light jet charter and ownership is significantly less expensive than Gulfstreams, Hawkers, and Falcons. Many people are still excited about these smaller, more efficient, and cheaper aircraft."
Deidre Woollard is the editor of Luxist.